NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2022
(UNAUDITED)
Note
1 — Organization and Nature of Operations
Earth
Science Tech, Inc. (“ETST” or the “Company”) was incorporated under the laws of the State of Nevada on April
23, 2010, subsequently changed to the State of Florida on June 27, 2022. As of November 8, 2022, the Company is a holding entity set
to acquire companies with its current focus in the health and wellness industry. The Company is presently in compounding pharmaceuticals
and telemedicine through its wholly owned subsidiaries RxCompoundStore.com, LLC. (“RxCompound”), Peaks Curative, LLC. (“Peaks”),
and Earth Science Foundation, Inc. (“ESF”).
RxCompound is
a compounding pharmacy that has historically focused on men’s health, specifically medical products directed at ED such as
Tadalafil, and Sildenafil Citrate (the generic names for Cialis and Viagra, respectively) and longevity. Currently licensed to
dispense in the state of Florida, New York, New Jersey, Delaware, Colorado, Rhode Island, and Arizona. RxCompound is in the
application process to obtain licenses in the remaining states in which it is not yet licensed to dispense prescriptions. Furthermore, RxCompound recently obtained its hazardous room to
compound hormonal creams within the month of December 2022 and is anticipated to have its sterile compounding room operational early
2023 to provide sterile products for injection.
Peaks is
the telemedicine referral site facilitating asynchronous consultations for branded compound medications prepared at RxCompound.
Peaks is currently positioned to prescribe to all 50 states utilizing Smart Doctors consultation services, but only able to fulfill
prescriptions within RxCompound’s licensed states. Peaks will be able to fulfill more states as RxCompound obtains dispensing
licenses in additional states. Patients who order Peaks via monthly subscription will be automatically enrolled into Peaks’
Loyalty Program. As a member of the loyalty program, members will receive credit to cover the costs on their Peaks facilitated
online doctor consultations. The Peaks membership enrollment will occur automatically once becoming a monthly subscriber and
automatically renewed at the time of the prescription renewal order. At the time of the renewal order, credits will be applied to
cover the Peaks facilitated online doctor consultation.
Peaks’
strategy has been to launch the website within three phases to insure efficiency and proper performance. Peaks launched its first Phase,
Phase I, in the month of June 2022, offering one product, Tadalafil in a gummy form within 3 different dosages and quantity offerings.
After months of feedback, successful orders and refills, Peaks commenced its Phase II website upgrade. Phase II will enhance the patient
experience as well as offering Tadalafil in the form of gummies and tablets (generic Cialis), and Sildenafil in the form of capsules
and tablets (generic Viagra) all in three different dosages and quantity offerings. Once Phase II has been completed, Peaks plans to
execute a marketing campaign within the RxCompound dispensing states to increase brand exposure and sales leading to Phase III. Phase
III includes over the counter (“OTC”) (non-prescription) products such as supplements and topicals. The OTC products will
be custom manufactured or fulfilled through partnered companies under Peaks brand and offered worldwide.
ESF
is a favored entity of ETST, effectively being a non-profit organization that was incorporated on February 11, 2019, and is
structured to accept grants and donations to help those in need of assistance in paying for prescriptions.
Note
2 — Summary of Significant Accounting Policies
Basis
of presentation
The
Company’s accounting policies used in the presentation of the accompanying consolidated financial statements conform to accounting
principles generally accepted in the United States of America (“US GAAP”) and have been consistently applied.
Principles
of consolidation
The
accompanying consolidated financial statements include all the accounts of the Company and its wholly owned subsidiaries Peaks and
ESF. The Company’s acquisition of RxCompound was consummated on November 8, 2022, along with Peaks; however, RxCompound
completed its PCAOB audit after the fiscal quarter that subsequently to period ended December 31, 2022, completed on February 3,
2023, (see Note 4, Related Party Balance and Transactions and Note 8, Subsequent Events).
All
intercompany balances and transactions have been eliminated on consolidation.
Use
of estimates and assumptions
The
preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting periods.
The
Company’s significant estimates and assumptions include the fair value of financial instruments; the accrual of the legal settlement,
the carrying value recoverability and impairment, if any, of long-lived assets, including the estimated useful lives of fixed assets;
the valuation allowance of deferred tax assets; stock-based compensation, the valuation of the inventory reserves and the assumption
that the Company will continue as a going concern. Those significant accounting estimates or assumptions bear the risk of change since
there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or
value.
Management
bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent
from other sources.
Management
regularly reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience,
and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly. Actual results could
differ from those estimates.
Carrying
value, recoverability, and impairment of long-lived assets
Company
follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC’) 360 to evaluate
its long-lived assets. The Company’s long-lived assets, which include property and equipment and a patent are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
The
Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the
related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying
amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally
determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets
are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the
net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.
The
Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance
or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or
use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s
overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant
decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates assets
for potential impairment indicators at least annually and more frequently upon the occurrence of such events. Impairment of assets,
if any, are included in operating expenses.
Cash
and cash equivalents
The
Company considers all highly liquid investments with a maturity of three months or less to be cash and cash equivalents.
Related
parties
The
Company follows ASC 850 for the identification of related parties and disclosure of related party transactions.
Pursuant
to this ASC related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would
be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted
for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that
are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties
with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other
to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties
that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in
one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might
be prevented from fully pursuing its own separate interests.
Commitments
and contingencies
The
Company follows ASC 450 to account for contingencies. Certain conditions may exist as of the date the consolidated financial statements
are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to
occur. This may result in contingent liabilities that are required to be accrued or disclosed in the financial statements. The Company
assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies
related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company
evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief
sought or expected to be sought therein.
If
the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability
can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment
indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be
disclosed.
Loss
contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.
Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on
the Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters
will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
Revenue
recognition
The
Company follows and implements ASC 606, Revenue from Contracts with Customers for revenue recognition. Although the new revenue standard
is expected to have an immaterial effect, if any, on the Company’s ongoing net income, management did implement changes to the
Company’s processes related to revenue recognition and the control activities within them. These included the development of new
policies based on the five-step model provided in the new revenue standard, ongoing contract review requirements, and gathering of information
provided for disclosures.
The
Company recognizes revenue from product sales or services rendered when control of the promised goods are transferred to the company’s
clients in an amount that reflects the consideration to which management expects to be entitled in exchange for those goods and services.
To achieve this core principle, management applies the following five steps: identify the contract with the client, identify the performance
obligations in the contract, determine the transaction price, allocate the transaction price to performance obligations in the contract
and recognize revenues when or as the Company satisfies a performance obligation.
Inventories
The
Company did not hold any inventories during the period ended December 31, 2022. During the Period ended December 31, 2022, the Company’s
operating entity Peaks fulfilled its sales directly through RxCompound, owned by the Company, but did not complete its PCAOB audit during
the period ended December 31, 2022. RxCompound completed its PCAOB audit on February
3, 2023, (see Note 4, Related Party Balance and Transactions and Note 8, Subsequent Events). The Company will have its inventories stated
at the lower of cost or market using the first in, first out (FIFO) method after the period ended December 31, 2022. A reserve
will be established if necessary to reduce excess or obsolete inventories to their realizable value.
Cost
of Sales
Components
of costs of sales include product and shipping costs to customers and any inventory adjustments.
Shipping
and Handling Costs
The
Company accounts shipping and handling costs to customers as cost of revenue.
Research
and development
Research
and development costs are expensed as incurred. The Company’s research and development expenses relate to its engineering activities,
which consist of the design and development of new products for specific customers, as well as the design and engineering of new or redesigned
products for the industry in general.
Income
taxes
The
Company follows ASC 740 in accounting for income taxes. Deferred tax assets and liabilities are determined based on the estimated future
tax effects of net operating loss carry forwards and temporary differences between the tax bases of assets and liabilities and their
respective financial reporting amounts measured at the current enacted tax rates. The Company records a valuation allowance for its deferred
tax assets when management concludes that it is not more likely those assets will be recognized.
The
Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained
on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated
financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized
upon ultimate settlement. As of December 31, 2021, the Company has not recorded any unrecognized tax benefits.
Interest
and penalties related to liabilities for uncertain tax positions will be charged to interest and operating expenses, respectively. The
Company has net operating loss carryforwards (NOL) for income tax purposes of approximately $6,150,613. This loss is allowed to be offset
against future income until the year 2039 when the NOL’s will expire. The tax benefits relating to all timing differences have
been fully reserved for in the valuation allowance account due to the substantial losses incurred through September 30, 2022. There was
no change in the valuation allowance for the periods ended December 31, 2022, and 2021.
Internal
Revenue Code Section 382 (“Section 382”) imposes limitations on the availability of a company’s net operating losses
after certain ownership changes occur. The Section 382 limitation is based upon certain conclusions pertaining to the dates of ownership
changes and the value of the Company on the dates of the ownership changes. It was determined that an ownership change occurred in October
2013 and March 2014. The amount of the Company’s net operating losses incurred prior to the ownership changes are limited based
on the value of the Company on the date of the ownership change. Management has not determined the amount of net operating losses generated
prior to the ownership change available to offset taxable income subsequent to the ownership change.
Net
loss per common share
The
Company follows ASC 260 to account for earnings per share. Basic earnings per common share calculations are determined by dividing net
results from operations by the weighted average number of shares of common stock outstanding during the year. Diluted loss per common
share calculations are determined by dividing net results from operations by the weighted average number of common shares and dilutive
common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered
in the computation.
As
of December 31, 2022, the Company has no warrants that are anti-dilutive and not included in the calculation of diluted loss per share.
Cash
flows reporting
The
Company follows ASC 230 to report cash flows. This standard classifies cash receipts and payments according to whether they stem from
operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method
(“Indirect method”) as defined by this standard to report net cash flow from operating activities by adjusting net income
to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts
and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income
that do not affect operating cash receipts and payments. The Company reports separately information about investing and financing activities
not resulting in cash receipts or payments in the period pursuant this standard.
Stock
based compensation
The
Company follows ASC 718 in accounting for its stock-based compensation to employees. These standards state that compensation cost is
measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting
period. The Company values stock-based compensation at the market price of the Company’s common stock as of the date in which the
obligation for payment of service is incurred.
Company
accounts for transactions in which services are received from non-employees in exchange for equity instruments based on the fair value
of the equity instrument exchanged in accordance with ASC 505-50.
Property
and equipment
Property
and equipment are recorded at cost net of accumulated depreciation. Depreciation is computed using the straight-line method based upon
the estimated useful lives of the respective assets as follows:
Schedule
of Property Plant and Equipment
| Leasehold
improvements |
|
Shorter
of useful life or term of lease |
| Signage
|
|
5
years |
| Furniture
and equipment |
|
5
years |
| Computer
equipment |
|
5
years
|
The
cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired
or disposed of, the cost and accumulated depreciation are removed from accounts and any resulting gains or losses are included in operations.
Recently
issued accounting pronouncements
In
August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.
2016-15, Classification of Certain Cash Receipts and Cash Payments. The new standard will change the classification of certain
cash payments and receipts within the cash flow statement. Specifically, payments for debt prepayment or debt extinguishment costs, including
third-party costs, premiums paid, and other fees paid to lenders that are directly related to the debt prepayment or debt extinguishment,
excluding accrued interest, will now be classified as financing activities. Previously, these payments were classified as operating expenses.
The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after
December 15, 2019, with early adoption permitted, and will be applied retrospectively. The Company does not expect that the adoption
of this new standard will have a material impact on its consolidated financial statements.
In
February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. This ASU requires lessees to recognize most leases
on their balance sheets related to the rights and obligations created by those leases. The ASU also requires additional qualitative and
quantitative disclosures related to the nature, timing and uncertainty of cash flows arising from leases. The guidance is effective for
fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company
is currently evaluating the impact the adoption of this new standard will have on its consolidated financial statements.
In
March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation – Stock Compensation. The new standard
modified several aspects of the accounting and reporting for employee share- based payments and related tax accounting impacts, including
the presentation in the statements of operations and cash flows of certain tax benefits or deficiencies and employee tax withholdings,
as well as the accounting for award forfeitures over the vesting period. The new standard was effective for the Company on April 1, 2017.
The Company does not believe that the adoption of this new standard will have a material effect on its consolidated financial statements.
In
May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers. This guidance will supersede
Topic 605, Revenue Recognition, in addition to other industry-specific guidance, once effective. The new standard requires a company
to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the
consideration to which the company expects to be entitled in exchange for those goods and services. In August 2015, the FASB issued ASU
2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, as a revision to ASU 2014-09, which revised the effective
date to fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted but not
prior to periods beginning after December 15, 2016 (i.e., the original adoption date per ASU 2014-09). In March 2016, the FASB issued
ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, which clarifies certain aspects of the principal-
versus-agent guidance, including how an entity should identify the unit of accounting for the principal versus agent evaluation and how
it should apply the control principle to certain types of arrangements, such as service transactions. The amendments also reframe the
indicators to focus on evidence that an entity is acting as a principal rather than as an agent. In April 2016, the FASB issued ASU 2016-10,
Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies how an entity should evaluate
the nature of its promise in granting a license of intellectual property, which will determine whether it recognizes revenue over time
or at a point in time. The amendments also clarify when a promised good or service is separately identifiable (i.e., distinct within
the context of the contract) and allow entities to disregard items that are immaterial in the context of a contract. The Company continues
to assess the impact this new standard may have on its ongoing financial reporting. The Company has identified its revenue streams both
by contract and product type and is assessing each for potential impacts. For the revenue streams assessed, the Company does not anticipate
a material impact in the timing or amount of revenue recognized.
In
May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers. This guidance will supersede
Topic 605, Revenue Recognition, in addition to other industry-specific guidance, once effective. The new standard requires a company
to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the
consideration to which the company expects to be entitled in exchange for those goods and services. In August 2015, the FASB issued ASU
2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, as a revision to ASU 2014-09, which revised the effective
date to fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted but not
prior to periods beginning after December 15, 2016 (i.e., the original adoption date per ASU 2014-09). In March 2016, the FASB issued
ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, which clarifies certain aspects of the principal-
versus-agent guidance, including how an entity should identify the unit of accounting for the principal versus agent evaluation and how
it should apply the control principle to certain types of arrangements, such as service transactions. The amendments also reframe the
indicators to focus on evidence that an entity is acting as a principal rather than as an agent. In April 2016, the FASB issued ASU 2016-10,
Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies how an entity should evaluate
the nature of its promise in granting a license of intellectual property, which will determine whether it recognizes revenue over time
or at a point in time. The amendments also clarify when a promised good or service is separately identifiable (i.e., distinct within
the context of the contract) and allow entities to disregard items that are immaterial in the context of a contract. The Company continues
to assess the impact this new standard may have on its ongoing financial reporting. The Company has identified its revenue streams both
by contract and product type and is assessing each for potential impacts. For the revenue streams assessed, the Company does not anticipate
a material impact in the timing or amount of revenue recognized.
In
January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles-Goodwill and Other, which simplifies the accounting
for goodwill impairments by eliminating step 2 from the goodwill impairment test. Instead, if “the carrying amount of a reporting
unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of
goodwill allocated to that reporting unit.” The guidance is effective for fiscal years beginning after December 15, 2019. Early
adoption is permitted. The Company is currently evaluating the impact the adoption of this new standard will have on its Consolidated
Financial Statements.
All
other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable.
Intangible
Assets
The
Company’s balance of intangible assets on the condensed consolidated balance sheet net of accumulated amortizations $17,806 and
$0 as of December 31, 2022, and December 31, 2021, from its Peaks telemedicine web platform.
Reclassification
Certain
amounts from the prior period have been reclassified to conform to the current period presentation.
Note
3 — Going Concern
The
accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
On December 31, 2022, the Company had negative working capital, an accumulated deficit of $30,265,697. These factors raise substantial
doubt about the Company’s ability to continue as a going concern.
The
Company as of November 8, 2022, became a holding entity set to acquire companies with its recent two acquisitions, RxCompound and Peaks
both operating in the health and wellness industry. The Company’s cash position may not be sufficient to pay its obligations and
support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management
believes that the actions presently being taken to further implement its business plan and generate sufficient revenues may provide the
opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate sufficient
revenues by acquiring companies and in its ability to raise additional funds, there can be no assurances to that effect. The ability
of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and
generate sufficient revenues.
The
condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue
as a going concern.
Note
4 - Related Party Balances and Transactions
On
November 8, 2022, the Company amended the Purchase Agreement for the Membership Units of the RxCompound and Peaks, dated November 3,
2021. Pursuant to the terms of the Amendment,
the parties modified the Purchase Price on the November 3, 2021, agreement such that the Company agreed to issue a cumulative total of
53,700,000 shares of its restricted Common Stock in exchange for all outstanding Membership Units of both RxCompound and Peaks, (see
Note 4, Related Party Balance and Transactions).
On
December 29, 2022, Peaks completed its PCAOB audit and RxCompound completed
its audit after the period ended December 31, 2022, on February 3, 2023, (see note 8 Subsequent Event).
Note
5 – Stockholders’ Equity
During
the three months ended December 31, 2022, and 2021, the Company issued 62,600,000 and 0 restricted common shares for cash of $316,500
and $0 respectively, (see ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS).
During
the three months ended December 31, 2022, and 2021, the Company issued 136,312,440 and 0 restricted common shares for debt settlements
at a fair value of $724,124 and $0 respectively, (see RESULTS OF OPERATIONS and ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE
OF PROCEEDS).
Note
6 — Commitments and Contingencies
Legal
Proceedings
The
Company is not currently a party to any material legal proceeding.
Lease
Agreements
The
Company is presently located at RxCompound’s location at 8950 SW 74th Court Suite 101, Miami, FL, 33156 after the Purchase
Agreement was consummated on November 8, 2022, (see Note 4, Related Party Balance and Transactions). RxCompound’s location sits
in 1,900 sq ft composed of offices, cooking room, hazardous room, sterile compounding room, lobby, and storage. The lease requires monthly
payments of $7,057 for a term of 36-months plus the single lump sum payment of $40,000 upon execution in June 2022.
Note
7 — Balance Sheet and Income Statement Footnotes
Accounts
receivable represent normal trade obligations from customers that are subject to normal trade collection terms, without discounts or
rebates. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current
assets. Notwithstanding these collections, the Company periodically evaluates the collectability of accounts receivable and considers
the need to establish an allowance for doubtful debts based upon historical collection experience and specifically identifiable information
about its customers.
Accounts
payable are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Accounts
payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business
if longer). If not, they are presented as non-current liabilities
Accrued
expenses of $86,183 as of December 31, 2022, mainly represent $67,410 in accrued payroll for the company’s CEO and CFO, and the
remainder for accrued interest on Notes Payable.
General
and administrative expenses were $5,599 and $61,526 for December 31, 2022, and 2021 respectively. For the three months ended
December 31, 2022, $2,236 was employee compensation, $1,032 internet and computer expenses, and the remainder was on miscellaneous
expenses.
Professional
fees were $22,233 for the three months ended December 31, 2022. For the three months ended December 31, 2022, there were $9,500 in
auditor fees, $6,200 in consulting fees, $5,000 in SEC legal fees and the remainder were miscellaneous fees.
Other
income was $146,739 for the three months ended December 31, 2022, from a debt settlement, (see November 8, 2022, 8-K filing).
Interest
expense was $(18,321) and $(2,452) for three months ended December 31, 2022, and 2021. Interest expense for three months ended December
31, 2022, was mainly due to Convertible Notes II and I (“VCAMJI Irrevocable Trust Convertible Note I” and VCAMJI Irrevocable
Trust Note II”) and Revolving Promissory Note (“Issa El-Chelkh Revolving Promissory Note”), (see Item 2, Liquidity
and Capital Resources).
Note
8 — Subsequent Events
On
February 3, 2023, the Company received RxCompound’s audited financials pursuant to the previously announced Purchase and Sale Agreement
dated November 8, 2022, and for the purposes set forth therein, the seller of RxCompound entered into a Purchase and Sale Agreement,
pursuant to which the Company agreed to acquire the Seller.
The
Company received an email on February 9, 2023 from the Autorité des Marchés
Financiers (“the AMF”) with a complaint, in French dated January 23, 2023. The Complaint alleges that the Company’s former
CEO, Dr. Michele Aube, improperly raised capital for the Company and is claiming Forty Thousand Dollars in damages. Dr. Aube resigned
in 2019. The Company has retained legal counsel in Quebec and will vigorously defend this claim.